Contract law question
Discussion
My girlfriend receives a 'variable pay award' in addition to her salary from a very large company. This VPA is based on a combination individual and company performance, each expressed as a % of salary.
A couple of weeks ago she received a letter stating that her award for this year was 3% individual + 6% company. The amount that this would be (9% of her annual salary) was also on the letter, which stated that it would be received in the following month's pay slip. The amount was within the range expected, and there was no reason to suspect any kind of mistake.
Yesterday she was told that there was a mistake on the company performance section and it should have been 5% rather than the 6% previously stated. She received a new letter with a new amount on which is about £500 less than the previous letter.
Can they do this? Not valid in this case, but what if she had taken action based on the expected amount (eg bought something on credit) that she would not have done should the mistake not have been made? She thinks that the same mistake was made for several hundred employees.
Many thanks for your comments.
A couple of weeks ago she received a letter stating that her award for this year was 3% individual + 6% company. The amount that this would be (9% of her annual salary) was also on the letter, which stated that it would be received in the following month's pay slip. The amount was within the range expected, and there was no reason to suspect any kind of mistake.
Yesterday she was told that there was a mistake on the company performance section and it should have been 5% rather than the 6% previously stated. She received a new letter with a new amount on which is about £500 less than the previous letter.
Can they do this? Not valid in this case, but what if she had taken action based on the expected amount (eg bought something on credit) that she would not have done should the mistake not have been made? She thinks that the same mistake was made for several hundred employees.
Many thanks for your comments.
burwoodman said:
there is no contract formed by receiving this letter. It is a simply mistake which is no correct.
Agreed, the isue isnt 'contract law' unless the offer was made as a result of 'consideration'.
If the situation was different in that she were renegotiating her 'new contract' based upon a certain sum, then she could take issue if this were then reduced after acceptance.
However, additionally as the sum itself is based upon the companies performance, there can of course be no negotiation in the loop and as such although a mistake has been made, she would have no right to ask for the higher figure.
My student job working in a large PC retailler I met very few wise managers.
The wisest and cleverest way a 'shouter' - a customer who wants to tell everyone his problem was put down was in the following way:
The man was annoyed that he had bought a PC and now the sale had started it was £100 cheaper. He came back to the store and demanded 'his £100 back'.
The managers retort was if the price had gone up by £100 since he bought it, would the man be as willing to come back to the store to give an extra £100 if he were asked!
Of course, that would be preposterous!
The point of the story is that if the first notice of how much bonus was awarded had understated the actual bonus, and indeed a second letter expanded it, I am sure she would have no problem in accepting the correction. Indeed if it were found some time later that the first notice was incorrect and too low, and the company made no steps to pay the right amount and correct their statement, then this would also be seen as unacceptable.
I would take the glass if half full approach... worrying about whether it was about 5, 6 or 7% is one thing, but thats a lot better than arguing whether it should be 1, 2 or 3%!
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